Authorized Causes for Dismissal of Employee

The two most commonly used grounds for termination of employee are the Authorized Causes under Article 283 and 284 of the Labor Code, and the Just Causes under Article 282. Below are the authorized causes for termination of employment.

Definition

As maybe broadly defined, authorized causes for dismissal of employee refer to those lawful grounds for termination which in general do not arise from fault or negligence of the employee. “Authorized causes” are distinguished from “just causes” under Article 282 in that the latter are always based on acts attributable to the employee’s own fault or negligence.

Authorized causes

The authorized causes for termination of employee are enumerated under Article 283 and 284 of the Labor Code, as follows:

Installation of labor-saving devices.The installation of labor-saving devices contemplates the installation of machinery to effect economy and efficiency in the method of production[1].

Redundancy.Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased of volume business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise[2].

Retrenchment to prevent losses. Retrenchment is an economic ground to reduce the number of employees. Retrenchment is the reduction of personnel for the purpose of cutting down on costs of operations in terms of salaries and wages resorted to by an employer because of losses in operation of a business occasioned by lack of work and considerable reduction in the volume of business[3]. It is sometimes also referred to as downsizing. It is aimed at saving a financially ailing business establishment from eventually collapsing.

Closure or cessation of operation. The closure of a business establishment is a ground for the termination of the services of an employee unless the closing is for the purpose of circumventing pertinent provisions of the Labor Code.

Disease. An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as the health of his co-employees.

It should be noted though that the above enumeration is not an exhaustive list of authorized causes of termination of employment. Valid application of union security clause, relocation of business, among others, may also considered authorized causes of termination.